Register of Crypto Asset Service Providers in Cyprus

Cyprus has recently provided a definition for obliged entities under the Prevention and Suppression of Money Laundering Law 2007 (188(I)/2007) (AML law). This is an implementation under the requirements of the 5^th Anti – Money Laundering Directive to bring Crypto – Asset Service Providers known as CASPs into its expanse. The Cypriot authorities have also decided that CASPs should become approved and registered in compliance with the requirements provided by the Cyprus Securities and Exchange Commission (‘‘CySEC’’). CySEC has issued a directive that sets out the procedure for registration of these entities. CySEC is obliged to publish on its website the register for CASPs and it is required to include the name, trading name, legal form and registration number. It also needs to entail the registered address of the CASP as well as its official website. The service provided by the registered entity must include one or more of either exchange between crypto – assets and legally circulating money, exchange between crypto – assets, management and transfer of crypto – assets, offering and sale of crypto – assets and the participation of financial services regarding distribution of crypto – assets. For the purposes of the Directive a crypto – asset is defined as an asset with a digital value, which is not issued or guaranteed by a central bank or a public authority.

The register is compulsory for any CASP operating from Cyprus, regardless of their registration in another relevant registry of another EU member for these services. CySEC will inform on their decision the relevant party involved within six months from the submission of the application. The application for the registration will succeed only if CySEC’s conditions are fulfilled as mentioned below:

• All essential documentation is submitted.
• Those individuals holding a management position are highly competent, trustworthy and enjoy good reputation as well as robust skills and knowledge. They also need to have a considerable amount of time in pursuance of their assigned tasks.
• The Board of Directors of the applicant requires to consist of at least four persons who meet the abovementioned point, of which two will be considered independent members and the remaining two will direct the business activities.
• Appropriate procedures are to be invoked in order to make sure that the applicant fully complies with the Law and Directive for the Prevention and Suppression of Money Laundering and Terrorist Financing.
• The entity needs to derive systems and control mechanisms to ensure the smooth operation of itself, including minimizing the risk of theft or loss of crypto – assets of its customers.
• The applicant needs to confirm that employees pursue their tasks at the best of their abilities and are not engaged in multiple duties at one given time so as to hinder themselves.
• It is also necessary for the CASP to possess its own funds at least equal to greater to the amounts mentioned below:
  • The initial amount of capital depending on the activities of the CASP.
  • One quarter (25%) of the Crypto – Asset Service Provider’s fixed expensed during the previous years.
    • 30% of the relevant amount from 1^st Jan 2022.
    • 60% of the relevant amount from 1^st Jan 2023.
    • 100% of the relevant amount from 1^st Jan 2024.

As per the amending AML law CASPs are required to inform CySEC for any amendments of information as per paragraph 9 of the Directive. The application requires a fee of €10000 payable to CySEC which are non-refundable.

For further information and clarifications related to the above regulations or anything related to Financial Services Law please contact us via email at info@zambartaslegal.com or via telephone +357 22262108.